Italy is in the process of introducing a new tax credit on
research and development activities.
The draft of the law decree, called Destinazione Italia, which
is currently in the process of being approved by the Italian
government, proposes to introduce a series of measures seeking to
encourage inward investment in Italy. These measures include a tax
credit for the period 2014 – 2016 on R&D expenses
sustained by Italian resident companies (as well as subsidiaries of
foreign groups and Italian branches of foreign companies).
The new tax credit is expected to be substantially different
from similar incentives previously used in Italy. The tax credit in
the previous law provision was equal to 10 percent of the cost
related to designers, up to a maximum of €5 million per year.
The new benefit is now expected to be recognised in the form of a
tax credit on 50 percent of the increasing R&D costs registered
during the three-year period, with a maximum amount of €2.5
million per year and a minimum amount of €50,000. The tax
credit is expected to be exempt from direct taxes.
Moreover, eligible companies may choose whether the proposed
credit will be reimbursed from the authorities or set off against
the payment of other taxes. In practice, this means that the credit
may become an immediate benefit on a company's cash position.
This offers a significant tax advantage for businesses involved in
design and manufacture. In particular, the new version of the tax
credit is expected to have a positive impact on the level of
investment in R&D equal to €600 million in 2014. Future
plans to expand the level of funds invested in R&D are also
The underlying idea of the proposals is that R&D activities
are not only those relating to the "invention" of a new
product/material, but also those seeking to improve the
shape/exterior of an existing product (in other words, its style or
design). DLA Piper's team in Italy is already verifying with
the relevant ministry whether it is possible to include under the
R&D activity either design costs incurred for in-house design
activities or similar costs related to external activities provided
by third parties. Our team was also extensively involved in a
similar project in 2008 that resulted in similar advantages for
players in the fashion market.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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